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Should I File for Chapter 7 or Chapter 13 Bankruptcy?

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When considering bankruptcy, the two most common options that are most widely available are either Chapter 7 or Chapter 13 bankruptcy.  The two actually have a few discerning differences, causing some people to be doubtful when considering which to choose.

Chapter 7 Bankruptcy – Liquidation of Assets

In a Chapter 7 bankruptcy, your assets are liquidized to order to completely wipe away all of your general debts.  This most often concerns unsecured debts, such as credit card bills and medical bills.  Filing for Chapter 7 bankruptcy requires you to meet the income standards, meaning that those who make more than a certain amount cannot file for Chapter 7.

Chapter 7 bankruptcy is designed for a quicker cancellation of debt, with the average timeframe being between three and six months.  Although it is possible that you may lose some property, your necessities, such as your home and car, can be claimed as exempt from liquidation during the bankruptcy, but just be careful afterwards.  Your mortgage, car payments, and other secured debts will still exist, and there’s always the danger of falling behind once again.

Chapter 13 Bankruptcy – Restructuring of Loans

In a Chapter 13 bankruptcy, rather than having your assets liquidated to repay debts, you instead have the debts reorganized into a manageable three or five-year repayment plan.  You get to keep all of your property while repaying what you can of your debts and, at the end of the period, any leftover unsecured debts will be wiped away.

Chapter 13 is much more long-term than Chapter 7, allowing debtors a longer amount of time to be free from creditor calls and the dangers of foreclosure or repossession.  Also, unlike Chapter 7 bankruptcy, Chapter 13 offers a few other options, such as catching up on missed mortgage payments and lien stripping, to further assist you in repaying your debts.  Chapter 13 works best for people who can afford to make payments, but have fallen behind and need a boost to get caught back up.

If you are considering filing for bankruptcy, but are still confused as to which option is best for you, call us today to speak with an experienced bankruptcy attorney.  Our attorneys are professionals specialized in bankruptcy, and they will guide you to make the best decision for yourself and your estate.

Call 615-898-0607

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